The year 2022 brought about another instalment of the FIFA World Cup. With the 22nd reincarnation of the world-acclaimed tournament, the FIFA world cup has only gotten bigger over the years. Perhaps this year is even bigger and more popular than the previous years. This is how football has evolved. It did not just evolve as a game; it also brought about a revolution of sorts in the mindsets of people around the world. More importantly, the sport revolutionized the economic structures of nations. The rivalry between participating teams and their fellow fans remains fierce. Along with it, nations which facilitate the biggest world tournament benefit not only economically but also as prospects and patrons.
Of course, the biggest benefactor from such a large event is FIFA itself as the organizing association. First of all, FIFA is a nonprofit organization with enormous revenue potential that devotes the majority of its income to the game’s development. The majority of these profits come from planning and promoting important international sporting events, the most well-known of which are the Men’s and Women’s World Cups, which are held every four years. Various other tournaments, like the former FIFA Confederations Cup and continental championships, are also well-liked. FIFA earned well over $4.6 billion in 2018, the year of the most recent World Cup.
Not only is the World Cup one of the largest sporting events ever, but it also provides a significant portion of FIFA’s income. Through the sale of broadcast rights, marketing rights, licensing rights, and money from ticket sales, FIFA makes significant profits from this and various other events. Aside from that, FIFA’s expenses are low, allowing the organization to invest as much money as possible in the growth of the sport itself.
The economy of FIFA has a close tie with the hosting nation, which facilitates the tournament for that time. FIFA is the only organization tasked with running both the World Cup and the Women’s World Cup, and hence, it gets to keep all the money. These events frequently bring in billions of dollars in income. Through a competitive bidding procedure, the World Cup host nation is selected.
The United States, Canada, and Mexico have been selected to host the World Cup for its 23rd edition in 2026, while Qatar will host the event in 2022. A lot of money must be invested to successfully plan such a sizable and well-attended event, particularly in the creation and improvement of first-rate infrastructure. As a result, the nation that submits the winning offer garners a lot of investment interest, which may stimulate the economy.
Surely, just like any economy, in order to generate revenue, some expenses must be borne. With so many nations competing to host the World Cup, FIFA naturally gains a significant negotiating advantage and gets away with imposing the majority of the conditions. Infrastructure built for the Cup is entirely the responsibility of the host country; FIFA makes no investments in such infrastructure. FIFA compensates the regional organizing group for planning and running the World Cup. Additionally, it covers staff and match officials’ expenses, player travel and lodging, and prize money for the participating nations. Additionally, it creates a FIFA World Cup legacy fund that the host nation may use in the future to advance the sport there.
Also, FIFA’s key expenses also include development costs, staff costs, and a financial aid program in addition to the costs associated with FIFA tournaments. In the four years preceding World Cups, FIFA tracks its revenue. FIFA recorded an income of more than $6.4 billion during the most recent cycle, which ran from 2015 to 2018. While licensing agreements accounted for the majority of this income, brand licensing and investment income were also significant contributors.
Expenses aside, the revenue generated by FIFA is mostly from various licenses and deals with different vendors of similar interest in sports. One of these rights is FIFA’s television rights. 49%, or nearly $3.13 billion, of FIFA’s $6.4 billion in revenue between 2015 and 2018 comes from broadcast rights. FIFA offers license rights to broadcasting organizations and television stations, allowing them to broadcast football matches and associated events in certain geographic locations. Football is incredibly popular all around the world; thus, there may be heated competition among broadcasters for licensing rights. Twenty-First Century Fox Inc. outbid Disney’s ESPN in a bidding battle, and FOX paid FIFA more than $400 million for the broadcast rights to the 2022 World Cup. For highlight rights, FOX received offers from Meta Inc., previously Facebook, Twitter Inc., and Snap Inc., totalling millions of dollars.
The sale of marketing rights, which reached $1.66 billion in the four years preceding up to the 2018 World Cup, is FIFA’s second-largest source of revenue. Given that a significant portion of this cycle was a highly publicized corruption scandal involving multiple high-level FIFA executives, this is an extremely amazing number. FIFA Partners, FIFA World Cup Sponsors, Regional Supporters, and National Supporters are the four different sponsorship tiers available for the World Cup. FIFA Partners participate in CSR and aid in the growth of the FIFA brand. Sponsors of the FIFA World Cup are granted the ability to market their company during the World Cup. Regional and National Supporters have offices in different regions or the host country and are allowed to advertise their brands there.
For the 2015–2018 cycle, FIFA’s licensing rights brought in $600 million, an increase of 114% over the previous cycle. This money comes from the purchase of agreements for brand licensing, royalties, and other comparable sources. Tickets and hospitality are perhaps the most lucrative form of revenue, given the tournament’s worldwide massive admiration. Ticket sales and hospitality and lodging rights make up the last considerable portion of FIFA’s revenue stream. Notably, a direct company of FIFA owns 100% of the earnings from ticketing rights. FIFA claimed $712 million in hospitality rights and ticket sales earnings from 2015 to 2018. For the 2018 World Cup activities in Russia, upwards of 10 million tickets were ordered. The top 10 nations that have purchased the most tickets for the 2022 World Cup in Qatar are Qatar, the United States, Saudi Arabia, England, Mexico, the United Arab Emirates, Argentina, France, Brazil, and Germany.
It all seems like a grand design for how FIFA works their economy. After all, managing a tournament of this scale and prestige does not come easy. There are similar tournaments which are perhaps of equal prestige, like the UEFA Champions League. But FIFA is the only one to accommodate a recognition to one dominant country out of 200. Hosting nations in world cups play a crucial role. Keeping in mind that FIFA cannot organize a world cup without a country being the host of it, the competition means a lot of prestige for the said nation as well. This year the host nation is Qatar.
The most-watched sporting event in the world will make its maiden appearance in the Middle East on November 20, thanks to Qatar. The FIFA World Cup is being hosted by Qatar as part of a calculated strategy to further the nation’s goals for infrastructural development and foreign policy. The Qatar National Vision 2030 (QNV 2030), a government goal to make Qatar a worldwide society and offer a superior level of life, is achieved through World Cup hosting. Projects directly related to the World Cup are included in the national development plans linked to QNV 2030, which aims to encourage post-tournament sustainability. To accommodate an expected 1.2 million guests during the month-long event—nearly half of the nation’s present population—Qatar has been putting in place the required infrastructure. In addition to constructing cutting-edge stadiums, Qatar has also added a cutting-edge metro system, enlarged its airport, and built new neighbourhoods inside its capital city of, Doha. Qatar invested around $200 billion in these projects; however, estimates vary.
Exports of hydrocarbons account for the majority of Qatar’s GDP. It is one of the top oil producers and has the third-largest natural gas reserves in the world. Although Qatar’s wealth has been greatly influenced by its natural resources, the market factors that drive the country’s hydrocarbon exports also cause revenue unpredictability. As a result, the nation wants to expand its non-energy economy in order to establish itself as a major regional business and travel destination. Realizing these goals will depend on hosting the World Cup. The oil sector’s contribution to Qatar’s GDP fell from 55% to 39% between 2013 and 2018, which was partly due to increased public capital spending related to World Cup preparations. Critical non-energy sector growth has been aided by the competition, and Qatar will prioritize sustaining that growth after the World Cup ends.
Qatar seeks to draw international direct investment as well as economic diversification (FDI). A coalition of Arab nations launched an economic and diplomatic boycott on Qatar in June 2017. The country’s FDI inflows thus fell precipitously from about $1 billion in 2017 to minus $2.8 billion in 2019. A significant increase in FDI might result from hosting the World Cup. In order to encourage FDI inflows, Qatar established the framework in 2018 by removing the existing ceiling of 49 percent foreign ownership and enabling foreign investors to control 100 percent of the capital in all industries.
As an autonomous Arab and Islamic nation, Qatar hopes to increase its geopolitical clout by hosting the 2022 FIFA World Cup. In addition, Qatar is anticipated to benefit from the 2021 reconciliation with regional rivals Saudi Arabia, the UAE, Bahrain, and Egypt following the lifting of the economic embargo placed on the country in 2017. This will help Qatar promote the tournament as one that all Arab nations can support. In fact, among Qatar’s most significant declared goals in hosting the event are to promote intercultural understanding and leave a legacy of inclusivity, sustainability, and the global community in the Middle East, Asia, and the rest of the globe.
A large international athletic event is uncommon for a nation the size of Qatar to stage, mostly because of the enormity of the infrastructure needed. The SC estimates that from November 21 to December 18, 2022, Qatar will get between 1.5 million and 2 million tourists during the event. With a population of just 1.7 million when Qatar gained the right to host the competition in 2010, the enormous difficulty of hosting the World Cup is put into perspective. With the tournament’s preparations helping to draw numerous foreign workers in the years after the announcement, the population had increased to 2.8m by 2022.
In order to hasten the social development and economic diversification strategies outlined in the Qatar National Vision 2030 and the medium-term National Development Strategy 2018–22, Qatar has incorporated the 2022 FIFA World Cup into its preparations. Qatar has invested in significant infrastructure projects like the Hamad International Airport, Doha Metro, Hamad Port, the new smart city of Lusail, and seven new stadiums in addition to upgrading an existing arena in order to achieve its strategic goals for the competition and broader development agenda. These stadiums were created with the intention of being transformed into community hubs where people could congregate, communicate, and learn as part of a larger plan for fostering national identity.
The 2022 FIFA World Cup is anticipated to provide a favourable legacy for Qatar’s reputation internationally, technical innovation, and sustainability. Through the competition, Qatar hopes to establish new benchmarks and norms in terms of sustainability. The Gulf Organisation for Research and Development (GORD), with a location at Qatar Science and Technology Park, was established by Qatar in 2009. The Global Sustainability Assessment System, which will establish criteria for the operational performance of structures and stadiums constructed for the 2022 FIFA World Cup, is being developed by GORD. When compared to other buildings constructed in accordance with American Society of Heating recommendations, the method allowed Qatar’s newly constructed stadiums to generate energy savings of 45%. As a result, it established the benchmark for energy consumption in the GCC.
The FIFA World Cup is the biggest multicultural sporting event. It is not just another source of entertainment anymore. The World Cup, with its current affairs and state, is now helping nations across the world to improve themselves. These improvements come in many shapes and forms, as seen with Qatar’s various initiatives. Qatar might just be the start of a generational evolution for a brighter and much bigger future. Perhaps the world will see many wonders in the forthcoming days, which will live to tell the tale for centuries.
Author- Shiddhartho Zaman
